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Frugal Finance: Habits to Improve Financial Stability

This article will offer advice on frugal habits that can help you save money and reach your financial goals.



Financial stability is a goal that many aspire to achieve, yet few people actually get to that point in life where they are in financial control and can make choices without compromise. In fact, according to data from Experian, a credit bureau agency, the average American has a debt of around $90,000. And since modern school systems are yet to add financial education to their curricula, it falls into your lap to learn and build habits to improve your financial health. Even if you are in a position of financial stability now, these habits can help you improve your situation even more. Here are six habits to start doing today:

Increase Your Savings Rate

Committing to saving a certain portion of your monthly income into a savings account is indeed frugal, yet people often set aside too little for these accounts to do any actual good when a calamity hits. According to the Bureau of Labor Statistics, the average income is $36,000 per year. If you only save one percent of your take-home pay every month, that’s $360. Considering that the costs of living in the U.S. and medical expenses are steep, this financial safety net might not be enough to cover financial emergencies. Though you should always set a goal for your savings, whether it’s a downpayment on a house, or to fund a start-up. Having a goal can help you plan your savings more easily, and it will help you get a timeline for the completion of your goal. This said it’s important to always be flexible with your savings. If you are too determined to reach your goal, you may be blind to other investment opportunities, or you may not want to spend money on things for yourself when you need them. It’s always important to be flexible so you can continue making smart and heath spending and saving decisions. 

Live Within Your Means

Achieving financial stability will require temporary sacrifices, including passing on that gorgeous 1-bedroom apartment in the city or eating out with friends at a new restaurant every weekend. Instead, live within, or even beneath, your means. If you take home $2,000 per month, it won’t make sense to rent an apartment that costs $2,000. Ideally, your housing should only consume less than half of your monthly income. And of the other half that’s left, you should portion it out so that you have money to put into savings. If you are finding yourself living from paycheck to paycheck, consider downsizing your living situation until you can increase your income.

Work Towards Getting a Raise

Financial milestones can be easily achieved if your income is steadily increasing. It’s easy to get bogged down by day-to-day responsibilities and life choices that people often forget to work towards a bigger paycheck. Check with your company’s HR department if there are any available training programs you can take to expand your skillset and, consequently, improve your position in the company. If you do not find a career advancement opportunity in your current work, create a plan that will help you transition to a better-paying company. If you’d rather stay with your current company, but still need to reach your financial goal, you can consider taking up a second, part-time job to make extra income. If you can manage the work-life balance of two jobs, you may be able to put all of the income from your second job directly into savings and reach your goal sooner. Of course, don’t overwork yourself, and make sure you are happy in both jobs you hold, risking your mental or physical health to save more is never a good idea. 


Investing is a low-effort way of compounding your savings. The measly two percent interest rate that banks offer simply isn’t enough to get you to a position where you can retire and live comfortably off of your savings. Invest your money in bonds and stocks. According to The Intelligent Investor by Benjamin Graham, how you allocate your capital between these two assets will depend on your risk profile and investment goals. You can also expand your investment portfolio to currencies, commodities, and cryptocurrencies, but be warned that such assets are relatively riskier.

Reduce TV Time

Or for that matter, reduce time spent on anything that is not productive i.e. social media, video games, hanging out with friends, etcetera. Your television is nothing more than an advertising platform that spits out endorsements via commercials and product placements on TV shows and movies. Depending on how much time you spend watching television, it can have a strong effect on your spending decisions. In addition to enticing you to engage in meaningless purchases, watching TV also takes up time that could be spent building a business or accumulating new information.

Of course, be sure to not overwork yourself and stress about building your business and saving money. If you have to spend money on something this week for yourself, do it. Don’t obsess over every penny, simply be mindful of when and where you can save. 

Build a Business

Although you’ve heard of entrepreneurial horror stories where a guy or gal spends upwards of $100,000 and then burns it all in a fiery wreck that was their business venture, building a business can definitely help improve your financial situation if executed correctly. Even if you do not currently have the money to start an enterprise, reading about money-making ideas can be categorized as a financially healthy habit. Some low-cost business ideas you can start include pet care services, marketing content writing, graphic design, and web development, bookkeeping, lawn care, transportation services, etcetera.

These habits are only useful if they are consistently carried out. Make it easier for yourself to adopt these practices into unbreakable habits by writing it down, inviting friends and family to practice them as well, using mobile applications to simplify expense-tracking and saving, and rewarding yourself every time you hit a milestone.

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